Statement of Thirty-Four Senior Corporate and Securities Law Professors Urging Commissioner Gallagher and Professor Grundfest to Withdraw Their Allegations against Harvard and the SRP

Posted by Thirty-Four Senior Corporate and Securities Law Professors, on
Thursday, January 15, 2015

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Corporate governance, Daniel Gallagher, Joseph Grundfest, Shareholder proposals, Shareholder Rights Project, Staggered boards
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This post is a joint statement by thirty-four senior corporate and securities law professors, listed in the statement, from seventeen leading law schools at Boston University, Chicago, Columbia, Cornell, Duke, George Washington, Georgetown, Harvard, Michigan, New York University, Northwestern, Stanford, Texas, UCLA, Vanderbilt, Virginia and Yale. Reacting to a recent paper by Commissioner Daniel Gallagher and Professor Joseph Grundfest (described on the Forum here), the thirty-four senior law professors listed in this statement opine that the paper’s allegations against Harvard and the Shareholder Rights Project (SRP) are meritless and urge the paper’s co-authors to withdraw these allegations. The Forum featured earlier posts about the paper by Professor Grundfest (most recently here), Professor Jonathan Macey (most recently here), Professor Tamar Frankel (here) and Harvey Pitt (here).

We are thirty-four senior professors from seventeen leading law schools whose teaching and research focus on corporate and securities law. We write to respectfully urge SEC Commissioner Daniel M. Gallagher, and his co-author Professor Joseph Grundfest, to withdraw the allegations, issued in a paper released last month (described on the Forum here), that Harvard and the Shareholder Rights Project (SRP), a clinic at its law school, violated the securities laws by assisting institutional investors in submitting shareholder proposals to declassify corporate boards.

We conduct our teaching and research at seventeen different law schools throughout the United States, including at Boston University, Chicago, Columbia, Cornell, Duke, George Washington, Georgetown, Harvard, Michigan, New York University, Northwestern, Stanford, Texas, UCLA, Vanderbilt, Virginia and Yale. We write in our individual capacities; our institutional affiliations are noted below for identification purposes only.

Members of our bipartisan group differ widely in our views on corporate law issues, including on the appropriate use of staggered boards and shareholder proposals. However, we all agree that Commissioner Gallagher and Professor Grundfest should withdraw their accusations.

First, the authors’ allegations are meritless. The Gallagher/Grundfest paper accuses Harvard and the SRP of violating federal securities law by assisting investors with shareholder proposals that did not include sufficient references to certain academic studies. These accusations are deeply flawed. (For a detailed analysis of flaws in the paper, see the posts by Professor Jonathan Macey available here, here, and here). For example, the proposals were consistent with the SEC’s long-standing policy on shareholder proposals; none of the more than one hundred public companies receiving proposals, many represented by the country’s premier law firms, raised any of the claims put forward by the authors; and there is no precedent for an enforcement action or private suit against shareholder proponents, let alone those assisting them, of the type that the paper urged against Harvard and the SRP. Members of our group do not all share the same view on each of these and the other flaws in the authors’ analysis. However, we all agree that the allegations of securities law violations in the Gallagher/Grundfest paper are meritless.

Furthermore, while it is always regrettable when meritless allegations are raised by any author, we are especially concerned that a sitting SEC Commissioner has chosen to issue such allegations without support from a prior investigation by the SEC staff and without due process of law. While the Commissioner has indicated his interest in changing the SEC’s long-held policy in this area, meritless accusations against private parties should not be part of an effort to bring about such a change. We worry that Commissioner Gallagher’s decision to level meritless allegations against specific private parties will have adverse consequences for the important work that the SEC must do.

We wish to stress our support for a vigorous policy debate about the appropriate role of staggered boards and shareholder proposals in corporate and securities law—subjects on which there is substantial diversity of views among us—and we welcome Commissioner Gallagher and Professor Grundfest as valuable participants in such a discussion. The baseless accusations issued against Harvard and the SRP should not, however, be part of this debate. We respectfully urge Commissioner Gallagher and Professor Grundfest to withdraw these accusations.

Jennifer H. Arlen Norma Z. Paige Professor of Law New York University School of Law	Jeffrey N. Gordon Richard Paul Richman Professor of Law Columbia Law School
Michal Barzuza Professor of Law The University of Virginia School of Law	Robert J. Jackson, Jr. Professor of Law and Milton Handler Fellow Columbia Law School
Jeffrey D. Bauman Professor of Law Georgetown University Law Center	Marcel Kahan George T. Lowy Professor of Law New York University School of Law
Laura Nyantung Beny Professor of Law University of Michigan Law School	Vikramaditya S. Khanna William W. Cook Professor of Law University of Michigan Law School
Lisa Bernstein Wilson-Dickinson Professor of Law The University of Chicago Law School	Michael Klausner Nancy and Charles Munger Professor of Business and Professor of Law Stanford Law School
Stephen Choi Murray and Kathleen Bring Professor of Law New York University School of Law	Reinier H. Kraakman Ezra Ripley Thayer Professor of Law Harvard Law School
Robert C. Clark Harvard University Distinguished Service Professor and Austin Wakeman Scott Professor of Law Harvard Law School	Kimberly D. Krawiec Kathrine Robinson Everett Professor of Law Duke Law School
John C. Coates IV John F. Cogan, Jr. Professor of Law and Economics Harvard Law School	Donald Langevoort Thomas Aquinas Reynolds Professor of Law Georgetown University Law Center
John C. Coffee, Jr. Adolf A. Berle Professor of Law Columbia Law School	Katherine Litvak Professor of Law Northwestern University School of Law
James D. Cox Brainerd Currie Professor of Law Duke Law School	Jonathan R. Macey Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law Yale Law School
Lawrence A. Cunningham Henry St. George Tucker III Research Professor of Law The George Washington University Law School	James Park Professor of Law UCLA Law School
Deborah A. DeMott David F. Cavers Professor of Law Duke Law School	J. Mark Ramseyer Mitsubishi Professor of Japanese Legal Studies Harvard Law School
Allen Ferrell Harvey Greenfield Professor of Securities Law Harvard Law School	Mark J. Roe David Berg Professor of Law Harvard Law School
Tamar Frankel Professor of Law Boston University School of Law	James C. Spindler Sylvan Lang Professor of Law University of Texas School of Law
Jesse M. Fried Dane Professor of Law Harvard Law School	Randall S. Thomas John S. Beasley II Professor of Law and Business Vanderbilt Law School
Mira Ganor Professor of Law University of Texas School of Law	Frederick Tung Professor of Law Boston University School of Law
Ronald J. Gilson Charles J. Meyers Professor of Law and Business Stanford Law School Marc and Eva Stern Professor of Law and Business Columbia University School of Law	Charles K. Whitehead Myron C. Taylor Alumni Professor of Business Law Cornell University Law School

Statement of Thirty-Four Senior Corporate and Securities Law Professors Urging Commissioner Gallagher and Professor Grundfest to Withdraw Their Allegations against Harvard and the SRP

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